The Slovenian government, which indirectly owns a majority
of the lender, is providing a 100 million-euro hybrid loan with
a fixed annual interest rate of 10 percent, the Finance
Ministry in the capital Ljubljana said in an e-mailed statement.
The bank also sold insurer Zavarovalnica Maribor d.d. last year
for 65 million euros and repurchased hybrid bonds at a discount,
the Maribor-based lender said in a separate statement.

“With these moves, the bank is meeting the requirements of
the European Banking Authority and the Slovenian central bank to
strengthen its capital position,” Nova Kreditna said in the
regulatory statement.

Slovenian banks, including Nova Ljubljanska Banka d.d. that
relied on funding from the European Central Bank, are seeking
fresh capital that is being depleted by surging bad loans as the
export-driven economy enters its second recession in three
years. Lenders in the euro-region nation were at the center of
investors’ concern Slovenia may be forced to seek international
aid to prop up its financial industry.

That fear has receded after the Constitutional court
prevented a referendum on the so-called bad bank plan that is
meant to clean lenders’ balance sheets as well as a vote on the
creation of a wealth fund that should ease the sale of state
assets, including Nova Kreditna.

After the capital boost, the core Tier 1 capital ratio will
rise above the mandated 9 percent, the bank said today.

Nova Kreditna rose the most in two weeks in Ljubljana,
gaining 0.053 euro cents, or 4.4 percent, to close at 1.27 euros
in Ljubljana. That gives the bank a market value of 50 million
euros after the company lost 60 percent of its value from a year
ago.